No other investor in recent times has been more avidly watched than billionaire Warren Buffett, CEO and chairman of the monumentally successful Berkshire Hathaway (NYSE:BRK.A). Once a textile firm, the company is now a broadly diversified conglomerate. Through the decades since his takeover in 1965, Buffett has built billions of dollars in shareholder value through a series of highly profitable acquisitions and business decisions. (This esteemed investor rarely changes his long-term investing strategy, no matter what the market does. Check out Warren Buffett's Bear Market Maneuvers.)
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Known by his nickname, The Oracle of Omaha, and for his uncanny ability to consistently pick stock market and business winners, Buffett has over the past several years been visiting countries classified as emerging markets in search of promising investments. Emerging markets are defined as national economies undergoing explosive growth and industrialization.
What Buffett thinks of various developing countries and which of them he thinks has the most potential is evident in Berkshire Hathaway's foreign holdings. As of April 10, 2011, Buffett's most recent foreign investment, a $9 billion acquisition, was India's giant Lubrizol (NYSE:LZ), a manufacturer of automotive lubricants and other petroleum and chemical products.
Although, Buffett is on record saying he doesn't consider India an emerging market, it is regarded as such by most analysts and Wall Street banking and investment firms. (Learn more in What Is An Emerging Market Economy?)
Further demonstrating Buffett's positive outlook for the hugely populous nation of 1.21 billion is the recent start-up of Berkshire Insurance, which will provide coverage for India's millions of motor vehicle drivers with the help of Bajaj Allianz General Insurance. Geico, Berkshire Hathaway's exceptionally profitable U.S. insurance giant, is a major source of the conglomerate's revenue.
These new ventures are just the beginning of Berkshire Hathaway's investments in India, Buffett said in a recent address in Bangalore. He intends to make an investment in India every year for the foreseeable future and wished he had begun investing there earlier.
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China is another major emerging market where Buffett has placed substantial bets on the nation's economic growth and the profitability of certain companies. His 10% ownership of China's automobile and battery manufacturer, BYD, acquired in 2008 for $230 million, is now worth approximately $1.6 billion. (This market is making strides in regulation and disclosure, check out Investing In China.)
South Korea was cited by Buffett in March this year as a "promising market" and "an attractive place to invest that will continue to grow." Buffett owns a stake in the country's TaeguTec Ltd., a multinational tool-making firm with 25 subsidiaries in various countries worldwide. He has also invested more than $1 billion in Posco, a Korean maker of steel.
Buffett also owns 80% of Iscar, Ltd. an Israel-based firm that manufactures metal cutting tools. Iscar also has plants in China and South Korea.
Ever on the lookout for promising investments, Buffett said the recent destructive Japanese earthquake, tsunami and subsequent nuclear disaster presents a unique buying opportunity in Japanese stocks. (If you can't predict the future, you'll need to plan ahead to protect your assets from the impact of major world events, check out A Disaster-Protection Plan For Your Portfolio.)
"It will take some time to rebuild, but will not change the economic future of Japan," Buffett was quoted as saying. Buffett foresees a massive Japanese reconstruction program over the coming years which he expects to stimulate the nation's economy.
"If I owned Japanese stocks, I would certainly not be selling them...," he said.
Berkshire Hathaway owns a majority of a holding company IMC, which owns 19.2% of Japan's Tungaloy Corp., a machine tool maker. This equity position was acquired in 2008 for about $1 billion.
Among other Berkshire Hathaway's foreign holdings are GlaxoSmithKline PLC (ADR, NYSE:GSK), a U.K. healthcare and pharmaceutical company; Tesco PLC, an English retailing company known as the nation's Wal-Mart; and Sanofi-Aventis, a French pharmaceutical company.
The Bottom Line
Wall Street and investors will be watching Buffett closely in the coming months to see what foreign and domestic acquisitions the highly successful investor makes. With about $38 billion in cash and cash equivalents that Berkshire Hathaway has available for investing, the Oracle of Omaha will no doubt put these idle funds to work, and emerging markets will most likely receive a significant share of that money.